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A non-parametric assessment of the effects of the Euro on GVC trade

Pierluigi Montalbano (), Silvia Nenci and Laura Dell'Agostino

International Economics, 2022, vol. 172, issue C, 56-76

Abstract: This work makes a fresh contribution to the long-standing debate on the trade effects of the euro. Its novelty lies in the joint use of trade in value added and non-parametric techniques. Specifically: i) we measure bilateral trade in value added to proxy backward and forward global value chain (GVC) linkages within the eurozone; ii) we compare these outcomes for treated and untreated units by disentangling long-term and short-term effects of the euro, taking advantage of panel data and combining matching and difference-in-difference approaches. Results show no significant evidence of a positive post-assessment of the euro effect on intra-eurozone GVC trade. These findings are robust to a set of sensitivity tests such as looking both at the intensity and composition of trade in value added flows and extending the sample to various control groups and datasets. We believe that our findings contribute to the long-standing debate on the euro by complementing the previous empirical evidence and providing an overall coherent and informative picture for policymaking.

Keywords: GVC trade; Currency union; Euro; Production fragmentation; Non-parametric estimates (search for similar items in EconPapers)
JEL-codes: F10 F15 F45 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.inteco.2022.08.005

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